- Moderate global economic growth is expected to support insurance sector growth over the next two years
- Growth in global non-life insurance premiums are projected to be driven by the emerging markets
- Pricing in commercial lines continues to deteriorate, but at a slower pace; demand for cyber risk solutions is increasing
- Global life insurance premiums are forecast to grow by 4.8% in 2017 and 4.2% in 2018 in real terms
- Emerging market life premiums will grow strongly, driven by demand for savings vehicles, particularly in emerging Asia
The global economy is expected to grow moderately over the next two years, supporting continued growth in insurance premium volumes, Swiss Re’s publication Global insurance review and outlook for 2017/18 shows.
Growth in global non-life premiums is forecast to fall slightly from 2.4% in 2016 in real terms to 2.2% in 2017, and accelerate to3.0% in 2018. In the life sector, global premiums are expected to grow by 4.8% in 2017 and 4.2% in 2018. The emerging markets, in particular emerging Asia, will be the main driver of premium growth in both the non-life and life sectors.
“The insurance industry faces headwinds, with moderate economic growth, and still ample capacity in the markets creating a challenging pricing environment,” says Kurt Karl, Swiss Re’s Chief Economist. “Nevertheless, premium volumes continue to grow, in both the advanced and emerging markets along with economic activity and an increase in the insurance penetration rate, particularly in emerging markets.”
Emerging markets to drive non-life sector growth
Non-life insurance sector premium volumes are expected to increase by 2.2% in real terms in 2017, after 2.4% in 2016, and by 3.0% in 2018. The emerging markets are expected to drive the improvement. Premium growth in the emerging markets is forecast to increase steadily from an estimated 5.3% in 2016 to 5.7% in 2017 and 6.7% in 2018.
The pricing environment in the global non-life sector remains challenging. Pricing in commercial lines continues to deteriorate across all regions, but at a slower pace. In contrast to many other commercial lines, however, rates in cyber insurance continue to harden but at a slowing pace and could level out soon. Increased awareness of the risks associated with cyber attacks and data breaches is boosting demand for related insurance solutions, and represents a significant growth opportunity for the non-life sector.
Demand for savings products in emerging markets to drive life premiums
In the life sector, premium growth is expected to be significantly stronger than in non-life. Global life premium volumes are forecast to grow by 5.4%, 4.8% and 4.2% in 2016, 2017 and 2018, respectively. Advanced market premiums are expected to grow by 2.1% in 2017 and 2018, but the major driver will again be the emerging markets, where stabilising economic growth, growing populations, urbanisation and a rising middle class underpin a positive outlook. Emerging market life premiums are forecast to grow by 14.9% in 2017 and by 10.9% in 2018, sustained by robust growth of savings products, particularly in emerging Asia. China will make a strong contribution with the government targeting an increase in insurance penetration to 5% by 2020, from 3% in 2014.
Source: AIP News Bureau